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Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $700,000 and expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30 %, 20% those years. Pretax accounting income the first year the equipment was used was $800,000, which includes interest r $21,000 from municipal governmental bonds. Other than the two described, there are no differences between account taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $700,000 and expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30 %, 20% those years. Pretax accounting income the first year the equipment was used was $800,000, which includes interest r $21,000 from municipal governmental bonds. Other than the two described, there are no differences between account taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $700,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $800,000, which includes interest revenue of $21,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 Record the income tax expense. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit >
Transcribed Image Text:Shannon Polymers uses straight-line depreciation for financial reporting purposes for equipment costing $700,000 and with an expected useful life of four years and no residual value. Assume that, for tax purposes, the deduction is 40%, 30%, 20%, and 10% in those years. Pretax accounting income the first year the equipment was used was $800,000, which includes interest revenue of $21,000 from municipal governmental bonds. Other than the two described, there are no differences between accounting income and taxable income. The enacted tax rate is 25%. Prepare the journal entry to record income taxes. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet < 1 Record the income tax expense. Note: Enter debits before credits. Transaction 1 General Journal Debit Credit >
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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